Ok. So. Interesting situation. Here in a couple months my wife and kids and I will be living in Oklahoma but only for a few months, at which time we will be moving to San Diego (needs of the Corps). My wife's mom lives in Oklahoma with her parents (she just went through a bad divorce). She is trying to buy her own house, but because of the divorce she is running into problems.

Now, I realize buying a house for us is probably not a good idea considering we won't be there for more than a few months. But here's our idea, and its mostly to help out my mother-in-law: we buy a foreclosed house for 50,000 or less there, live there for a couple months, then when we're off to San Diego, we sell it to my mother-in-law.

Here's where my questions comes in. I am entitled to a VA loan. If I sell the house to my mom-in-law, for what we owe on the mortgage, will she be left with the same interest rate as we were given? Or could she get shafted?

Are there any other potential problems I'm not considering in this deal?

TheSadPanda

07-24-2013 01:44 AM

You need to talk to a bank and/or loan company. As long as the loan is in your name, you will stay at the rate you are at (as long as its a fixed rate). If she takes out a loan to pay off the house then she is not entitled to your interest rate. The bank or loan company will give her a rate based upon credit, income, etc.

If the loan and house are still in your name, you could "lease" the house to her. But taking out a loan in your name to pay for her house is a dangerous game that i would not play. If she for whatever reasons cant make the payments, then it is your credit and well being at risk if you dont make those payments.

In summary- talk to your loan agency with your MIL present. This is not the place to find such information.

EDIT: im not trying to be a butt hole. I just dont want me or anybody else here to give you any wrong information, and steer you wrong.

JW357

07-24-2013 01:50 AM

Quote:

Originally Posted by TheSadPanda

You need to talk to a bank and/or loan company. As long as the loan is in your name, you will stay at the rate you are at (as long as its a fixed rate). If she takes out a loan to pay off the house then she is not entitled to your interest rate. The bank or loan company will give her a rate based upon credit, income, etc.

If the loan and house are still in your name, you could "lease" the house to her. But taking out a loan in your name to pay for her house is a dangerous game that i would not play. If she for whatever reasons cant make the payments, then it is your credit and well being at risk if you dont make those payments.

In summary- talk to your loan agency with your MIL present. This is not the place to find such information.

EDIT: im not trying to be a butt hole. I just dont want me or anybody else here to give you any wrong information, and steer you wrong.

I fully intend to talk to some loan officers. I just didn't know if, maybe, we had one on here or someone who has experience doing this. We're several months away from a decision so at this point I'm just trying to get a little preliminary information.

TheSadPanda

07-24-2013 01:54 AM

Fair enough. Just be smart

TruggieTex

07-24-2013 02:02 AM

Quote:

Originally Posted by TheSadPanda

You need to talk to a bank and/or loan company. As long as the loan is in your name, you will stay at the rate you are at (as long as its a fixed rate). If she takes out a loan to pay off the house then she is not entitled to your interest rate. The bank or loan company will give her a rate based upon credit, income, etc.

If the loan and house are still in your name, you could "lease" the house to her. But taking out a loan in your name to pay for her house is a dangerous game that i would not play. If she for whatever reasons cant make the payments, then it is your credit and well being at risk if you dont make those payments.

In summary- talk to your loan agency with your MIL present. This is not the place to find such information.

EDIT: im not trying to be a butt hole. I just dont want me or anybody else here to give you any wrong information, and steer you wrong.

Panda,
Wife says you are correct...not that you were asking, but she is a processor/underwriter. :)
The only addition would be to ask the loan officer if the loan is assumable.
That could help a future hand off, provided qualifications are met.

SSGN_Doc

07-24-2013 02:02 AM

You won't get much equity in the home in a few months. Closing costs, legal fees, taxes, escrow, insurance, etc. all get figured into the loan and payments. If you turn around and sell it to your mother-in-law, all of those costs are going to occur again. In the life of a 20 or 30 year loan those costs aren't to hard to swallow, but if you aren't going to live in it for a few years to get your money's worth out of the loan and fees it ends up being a big money hole at the time of sale.

Also if she can't qualify for a loan now, what will change in a few months that would let her qualify when you go to sell it?

Can you afford to make a house payment on that house for months at a time, while paying for your new living quarters in California, at the same time? Must consider this if the loan doesn't go through for her at first or if closing the loan takes a while or if she doesn't qualify and you have to find a new buyer or a renter to make the house payment.

How fast would you be able to get a loan closed on the house when you buy it. The VA requires pretty strict inspections and are not willing to finance some homes that may be in bad material condition as many foreclosures can be.

Just a few things to consider if you think you are going to flip a house in the middle of a transfer.

I have a house in Georgia, that I still have not sold. Coming up on a year since my transfer to Washington. I have a renter currently, but once his lease is up, I'm on the hook for my house payment and the rent for the house I'm currently in if he doesn't renew the lease.

c3shooter

07-24-2013 02:08 AM

Not a Loan Arranger (or even Tonto)

As the gent right up there said, talk to the people that would be lending the money. I WILL tell you there are several booby-traps in what you are considering.

First, the foreclosed house. Many of these that wind up as HUD properties do go really cheap. HOWEVER- terms of the loan and of the sale- many of those MUST be occupied by the buyer or immediate family for a minimum period (frequently, 2 years)

Second, what you are describing is having her assume the loan. Bank loaned YOU money. Based on YOUR income, debts, and credit history. Without having prior approval from the mortgage holder, when sold, they are to be paid in full. Right then. They did not agree to loan money to her. And they DO hold the deed (of trust) until you pay it all off.

Last- VA loan- does not mean walk in paying nothing up front. It means the govt guarantees a portion of the loan, so you can get a mortgage with no down payment. HOWEVER- closing costs will be yours to pay. That is frequently several thousand in one chunk. Got the front money to pay for that?

A good step may be to find a GOOD Realtor, and have them school you a bit. I still owe the one that taught me a bit.

JW357

07-24-2013 02:17 AM

Quote:

Originally Posted by SSGN_Doc

You won't get much equity in the home in a few months. Closing costs, legal fees, taxes, escrow, insurance, etc. all get figured into the loan and payments. If you turn around and sell it to your mother-in-law, all of those costs are going to occur again. In the life of a 20 or 30 year loan those costs aren't to hard to swallow, but if you aren't going to live in it for a few years to get your money's worth out of the loan and fees it ends up being a big money hole at the time of sale.

Also if she can't qualify for a loan now, what will change in a few months that would let her qualify when you go to sell it?

Can you afford to make a house payment on that house for months at a time, while paying for your new living quarters in California, at the same time? Must consider this if the loan doesn't go through for her at first or if closing the loan takes a while or if she doesn't qualify and you have to find a new buyer or a renter to make the house payment.

How fast would you be able to get a loan closed on the house when you buy it. The VA requires pretty strict inspections and are not willing to finance some homes that may be in bad material condition as many foreclosures can be.

Just a few things to consider if you think you are going to flip a house in the middle of a transfer.

I have a house in Georgia, that I still have not sold. Coming up on a year since my transfer to Washington. I have a renter currently, but once his lease is up, I'm on the hook for my house payment and the rent for the house I'm currently in if he doesn't renew the lease.

Everyone is giving valid points. I suppose selling it to her wouldn't be smart immediately. I suppose the smarter option, in the context of the general end-game, is her essentially being my tenant and renting out the house. She has a decent job for the state dept of Education so I'm not worried about her being ale to make the payments (if it turns out that's gonna be an issue we won't buy the house to begin with). And then later on, in a few years, possibly selling it to her when its easier for her. Or we (I guess) could just keep the loan in our name until the loan is paid off, and the transfer it to her?

We won't be buying a house in San Diego, as we will only be there for about two to three years. But wherever we will be after I get out, we plan on buying a house for ourselves.

My concern with keeping the loan on her house in my name is having more than one VA loan out at a time...?

*sigh* I don't know...

johnr1943

07-24-2013 03:43 AM

Quote:

Originally Posted by JW357
(Post 1313281)

Everyone is giving valid points. I suppose selling it to her wouldn't be smart immediately. I suppose the smarter option, in the context of the general end-game, is her essentially being my tenant and renting out the house. She has a decent job for the state dept of Education so I'm not worried about her being ale to make the payments (if it turns out that's gonna be an issue we won't buy the house to begin with). And then later on, in a few years, possibly selling it to her when its easier for her. Or we (I guess) could just keep the loan in our name until the loan is paid off, and the transfer it to her?

We won't be buying a house in San Diego, as we will only be there for about two to three years. But wherever we will be after I get out, we plan on buying a house for ourselves.

My concern with keeping the loan on her house in my name is having more than one VA loan out at a time...?

*sigh* I don't know...

If it were me, I wouldn't do it at all -unless you can afford the financial risk. If anything goes wrong, you're on the hook and you may mess up your credit rating. I have heard way too many financial horror stories over the years from too many people. :)

JW357

08-02-2013 04:43 PM

Just a quick update, in case any of you are losing sleep over this issue. :)

We aren't going to be buying a house in Oklahoma. We were really only entertaining the idea for a few days. It seems my mother-in-law has been approved for a loan, at least as far as I understand.